Economics for Leaders Lesson 1: Scarcity & Economic Growth.

Slides:



Advertisements
Similar presentations
1 CHAPTER.
Advertisements

Economics Chapter 1 Section 1.
BUSINESS BASICS Final BUSINESS BASICS Final. An entrepreneur is a risk-taker in search of profits.
What is Economics? Chapter 1.
SCARCITY, CHOICE, AND OPPORTUNITY
Why are some countries rich/poor? How can we reduce poverty? What about Capitalism?
HOW PEOPLE USE LIMITED RESOURCES TO SATISFY UNLIMITED WANTS
Economics for Leaders Don’t try to write down everything I say Lectures will be fast-paced with lots of information and lots of interaction Pay attention.
Economics for Leaders Lesson 2: Opportunity Cost, Incentives & Markets.
1 WHAT IS ECONOMICS?. 1 WHAT IS ECONOMICS? Notes and teaching tips: 6 ,8,19, 20, 26, 30, and 34. To view a full-screen figure during a class, click.
© 2010 Pearson Education Canada. You are studying economics at a time of extraordinary change. Your life will be shaped by the challenges you face and.
Economic Issues 101 D.W. Hedrick.
Do you think like an economist?
Economics for Leaders Lesson 1: Scarcity & Economic Growth.
Economics for Leaders Lesson 1: Scarcity & Economic Growth.
OPPORTUNITY COST & INCENTIVES Economics for Leaders: Lesson 2.
Economics for Leaders The Ultimatum Game. Proposal Selection Form Proposer Identification Code __________________ Circle a proposal: 9/1 8/2 7/3 6/4 5/5.
Macro Chapter 16 Creating an Environment for Growth and Prosperity.
ECONOMIC REASONING PRINCIPLES (AKA “ERP’S). How Do We Define Economics? The study of how people seek to satisfy their wants and needs by making choices.
Economics for Leaders I have with me at this EFL program a new Dell Vostro 13 Notebook computer. It has 13” screen, DVD drive, 500 GB hard drive, 4 GB.
BUSINESS BASICS Final BUSINESS BASICS Final. An entrepreneur is a risk-taker in search of profits.
WHAT IS ECONOMICS? 1 CHAPTER Dr. Gomis-Porqueras ECO 680.
Ten Principles of Economics
Economics for Leaders Lesson 6: Incentives, Innovation & the Role of Institutions.
Section 1 Basic Elements of Economics. The story of wealth and health for 200 countries over 200 years.
* Economic Growth & Scarcity. Economics for Leaders Human prosperity and social cooperation develop spontaneously in societies that protect private property.
Economics for Leaders Lesson 7: Property Rights Is the Environment Different?
Economics for Leaders Lesson 8: Costs & Benefits Of Government Action.
Economics for Leaders Economic Growth & Scarcity.
SCARCITY, OPPORTUNITY COST & THE FOUR FACTORS OF PRODUCTION.
Economics for Leaders Lesson 2: Opportunity Cost & Incentives.
Economic Decisions and Systems
Daily Warm up Activity Please write on a piece of notebook paper to share and ultimately turn in. Write a detailed and well formulated argumentative ½.
Economics for Leaders Economics Mr. Hellums Economic Growth: The Solution to Scarcity.
Economics for Leaders Lesson 1: Scarcity & Economic Growth.
Economics for Leaders Lesson 2: Opportunity Cost & Incentives.
After the Test, Get a Gold Book off the shelf- Please write all answers on your own paper. pg , pg , pg , pg Review all terms.
Thinking Like an Economist Bundle 1 Key Terms. Capitalism Private citizens own and use factors of production to make money.
E. Napp Economic Growth In this lesson, students will be able to identify factors which lead to macroeconomic growth. Students will be able to identify.
Unit One Thinking Like an Economist Fundamental Economic Concepts.
Mr. Rosenstock Economics the Fundamental Problem of Economics.
Economics for Leaders Lesson 1: Scarcity & Economic Growth.
Is CAPITALISM GOOD For The POOR?. No Yes It DEPENDS!
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 1 SLIDE Satisfying Needs and Wants Economic Choices.
Seven Principals of Economics & Economic Systems.
What is Economics? How Economic Systems Work Economic Resources Capitalism and Free Enterprise.
What Is Economics? CHAPTER 1. After studying this chapter you will be able to Define economics and distinguish between microeconomics and macroeconomics.
Economics Chapter 1 All of the Basics. Scarcity The Fundamental Economic Problem is….. Scarcity –is the condition where unlimited human wants face limited.
Question of the Day: What choices have you made today & what were the opportunity costs of these choices?
Economics for Leaders Lesson 1: Economic Growth & Scarcity.
Lesson 2: Opportunity Cost & Incentives
Scarcity and the Factors of Production
What is Economics? Chapter 1.
The Fundamental Economic Problem
EOC Review Civics and Economics Economics Basics & Types of Economies
Why are some countries rich/poor? How can we reduce poverty?
P1Session 1 What is Economics?.
Economics for Leaders Lesson 3: Open Markets.
Economic Decisions and Systems
Being an Economically Smart Citizen
Economics for Leaders Lesson 3: Open Markets.
Economic Growth & Scarcity
Economic Growth and Scarcity
Economics The Social Science that deals with the fundamental economic problem of meeting people’s virtually unlimited wants with scarce resources Needs.
Opportunity Cost & Incentives
With Shakil Al Mamun.
ECONOMIC PRINCIPLE #1… PEOPLE FACE TRADEOFFS
Lesson 1: Economic Growth & Scarcity
Lesson 2: Opportunity Cost & Incentives
Economics for Leaders Lesson 3: Open Markets.
Presentation transcript:

Economics for Leaders Lesson 1: Scarcity & Economic Growth

Economics for Leaders Hypothesis for the Week: Human prosperity and social cooperation develop spontaneously in societies that protect private property rights and encourage voluntary trade.

Economics for Leaders Economic Reasoning Propositions #1: People choose, and individual choices are the source of social outcomes. Scarcity necessitates choices: not all of our desires can be satisfied. People make these choices based on their perceptions of the expected costs and benefits of the alternatives. #2: Choices impose costs; people receive benefits and incur costs when they make decisions. The cost of a choice is the value of the next-best alternative foregone, measurable in time or money or some alternative activity given up. #3: People respond to incentives in predictable ways. Choices are influenced by incentives, the rewards that encourage and the punishments that discourage actions. When incentives change, behavior changes in predictable ways. #4: Institutions are the “rules of the game” that influence choices. Laws, customs, moral principles, superstitions, and cultural values influence people’s choices. These basic institutions controlling behavior set out and establish the incentive structure and the basic design of the economic system. #5: Understanding based on knowledge and evidence imparts value to opinions. Opinions matter and are of equal value at the ballot box. But on matters of rational deliberation the value of an opinion is determined by the knowledge and evidence on which it is based. Statements of opinion should initiate the quest for economic understanding, not end it

Economics for Leaders ERP-5: Understanding based on knowledge and evidence imparts value to opinions. Opinions matter and are of equal value at the ballot box. But on matters of rational deliberation the value of an opinion is determined by the knowledge and evidence on which it is based. Statements of opinion should initiate the quest for economic understanding, not end it. Economic Reasoning Principle #5: Understanding based on knowledge and evidence imparts value to opinions.

Economics for Leaders The Lamp

Economics for Leaders Why Can’t You Have It All? SCARCITY: the FACT that resources are limited and human wants and needs are unlimited Not enough to go around!

Economics for Leaders Economic Reasoning Principle #1: People choose, and individual choices are the source of social outcomes. Scarcity necessitates choices: not all of our desires can be satisfied. People make these choices based on their perceptions of the expected costs and benefits of the alternatives.

Economics for Leaders Scarcity Isn’t Optional Fact: Resources ARE limited  Land (57,506,000 sq mi. & not even all habitable!)  Labor (6,7 bil. souls x 24 hrs a day)  Capital (less than ∞, trust me)  Entrepreneurship (not everybody is Bill Gates) Fact: Human desires are boundless

Economics for Leaders Are YOU Never Satisfied ? – It’s not just you out there

Economics for Leaders Scarcity Economics is: a study of choice  Choice

Economics for Leaders Key Economic Proposition Scarcity necessitates choice – people must choose

Economics for Leaders Scarcity  Choice

Economics for Leaders Key Economic Proposition Scarcity necessitates choice – people choose & – choices determine social outcomes

Economics for Leaders Wealth and Poverty And the outcomes are noticeably different …

Economics for Leaders

Understanding Wealth & Poverty

Economics for Leaders Quiz … Who is this person? What was the title of the book he wrote in 1776? – An Inquiry into the Nature and Causes of the Wealth of Nations Adam Smith

Economics for Leaders During This Week, We Will Conduct … An Inquiry into the Nature and Causes of The Wealth of Nations

Economics for Leaders Poverty in the World… GDP per capita (ppp) Rwanda $1282

Economics for Leaders The Rest of the Story... GDP per capita (ppp 2012 US Dollars) Malawi$ 893 Rwanda $ 1282 Uzbekistan$ 3287 Indonesia$ 4636 Ecuador$ 8669 World average$12,200 Mexico$ 16,588 United States$ 48,112

Economics for Leaders The Elusive Quest for Growth I do not see how one can look at figures like these without seeing them as possibilities… Is there some action a government … could take that would lead the … economy to grow … ? If so, what exactly?

Economics for Leaders The consequences for human welfare …are simply staggering: Once one starts to think about them, it is hard to think about anything else. –Robert Lucas, University of Chicago »Nobel Laureate, 1995 »July, 1988

Economics for Leaders

Why Should We Care?

Economics for Leaders Why are some countries rich and others poor? Low, Middle and High Income Economic reasoning tools can help us answer this and other questions about world poverty

Economics for Leaders How Will Tom Hanks Survive? He must produce! What? What he wants - – Food – Shelter

Economics for Leaders Dealing with Scarcity We must produce things that we want – that is, – goods and services that we value

Economics for Leaders Economic Growth If we can increase what we produce per person Then our standard of living rises over time – even in the face of scarcity We refer to this as “economic growth” – Often measured by GDP = gross domestic product GDP = sum value of all produced in economy in a year

Economics for Leaders ~1750 Population Growth and Important World Events

Economics for Leaders

Sources of Economic Growth Perspiration Longer work day Higher labor force participation rate Inspiration Improve worker …

Economics for Leaders “Productivity” Our nation’s standard of living depends on it!

Economics for Leaders Importance of Productivity A engineer who, while visiting China, came across a large crew of men building a dam with picks and shovels. When the engineer pointed out to the supervisor that the job could be completed in a few days, rather than many months, if the men were given motorized earthmoving equipment, the supervisor replied:... such equipment would destroy many jobs.

Economics for Leaders The Real Source of Wealth? Oh, the engineer responded, – “I thought you were interested in building a dam. – If it’s more jobs you want, why don’t you have your men use spoons instead of shovels.” Moral: – Purpose of economic activity produce as much VALUE as possible with scarce resources.

Economics for Leaders Economic Growth improves the lives of the poor by making the pie bigger Bigger “slices” mean higher standards of living

Economics for Leaders The Secret to Economic Growth: Productivity The output produced from a given set of resources in a given period of time. Increasing productivity means that greater output is produced from a given set of resources in a given period of time. Hans Rosling and the Magic Washing Machine

Economics for Leaders Farming Productivity Then and Now…

Economics for Leaders Key to Productivity: Institutions the formal and informal “rules of the game” that shape incentives and outline expected and acceptable forms of behavior in social interaction. Institutions in your life:

Economics for Leaders What are the “rules of the game” (the accepted and expected forms of social interaction) in: Dating ?

Economics for Leaders Institutions Matter: Property rights The rule of law Open markets Entrepreneurship and innovation

Economics for Leaders Institutions Shape Incentives The reward or penalties that influence people’s choices and behavior.

Economics for Leaders The “Big Ideas” from Lesson 1: 1.Scarcity forces us to choose among alternatives 2.Economic growth gives us more to choose from and raises standards of living by: – reducing infant mortality, – Increasing life expectancy, – reducing hunger, – improving environmental quality, and – reducing the incidence of debilitating diseases.

Economics for Leaders The “Big Ideas” from Lesson 1: 3.Some institutions and institutional arrangements encourage economic growth and some do not. 4.The institutions that foster growth and economic development include: Open markets Property rights and the rule of law Entrepreneurship and innovation